SpaceX Is Going Public -- Here's How NuScale Power Can Benefit

SpaceX looks to be going public soon. A public share sale will make it easy for billions of people worldwide to invest in SpaceX. With a target valuation of $1.75 trillion, SpaceX could immediately become the largest space stock in history.

SpaceX won't be the only beneficiary of its record-setting IPO. There's a sneaky way for other innovative companies, such as NuScale Power (NYSE: SMR) -- a nuclear stock designing innovative small modular reactors -- to benefit from the increased buzz.

1 surprising way NuScale Power will benefit from the SpaceX IPO

There's a major problem looming that few investors are aware of: the AI industry's desperate need for new energy sources. In the coming years, trillions of dollars will be spent scaling AI data center infrastructure. This infrastructure is not optional should the AI industry wish to continue its breakneck growth rates.

The problem is that data centers are energy intensive. "Data centers require large amounts of energy to keep up with their massive scale of operations and the unprecedented growth of AI and cloud computing," concludes one industry report. "The always-on nature of servers and the energy-intensive cooling systems required to support 24/7 functions contribute to high data center energy consumption."

The current electricity grid isn't suitable to meet AI's growing energy appetite. In short, a massive amount of new energy generation capacity will need to come online quickly for AI's growth to continue.

Image source: Getty Images

The AI industry is so desperate to bring new energy sources online that it's investing billions of dollars into new technologies with limited -- or even zero -- historical proof points. SpaceX, for instance, wants to launch data centers into space to lower cooling costs given the low ambient temperatures in low Earth orbit. Orbital data centers have never been tested before. Experts warn that everything from rampant, incessant radiation to the vacuum of space could make the endeavor impossible.

Whether or not orbital data centers become a reality, SpaceX is about to bring huge attention to the growing energy problem that the entire AI industry now faces. That's good news for NuScale Power, a developer of nuclear technologies that, while relatively novel, are much more proven than orbital data centers. There are already several small modular reactors (SMRs) -- the form factor of nuclear plants that NuScale specializes in -- operational in the world today. And several designs have already been approved by the U.S. Nuclear Regulatory Commission.

After a brief correction, NuScale's market cap is now down to just $4.4 billion. Yet the company remains the only one in the U.S. with an approved SMR design, with several potential megaprojects in its pipeline, including a 6-gigawatt project with the Tennessee Valley Authority, a major U.S. utility.

A big challenge for SMR stocks right now is real-world adoption. But these projects take years to complete. NuScale doesn't see its first project coming online until the early 2030s. But over the next few decades, trillions of dollars are expected to be spent scaling SMR technology. SpaceX's efforts may end up highlighting the challenge that AI and data center companies will increasingly struggle with, potentially resulting in more attention and demand for NuScale's SMR plants.

Ryan Vanzo has no position in any of the stocks mentioned. The Motley Fool recommends NuScale Power. The Motley Fool has a disclosure policy.